Filing for bankruptcy may provide you with a variety of benefits such as an automatic stay against creditor collection activities. However, many still believe that taking such a step means that you are careless with money or that you will lose all of your possessions. The truth is that you may be able to keep your Massachusetts home or other assets while reducing or eliminating your debts.
The automatic stay
An automatic stay is granted the moment that you submit your bankruptcy petition to the court. The stay prevents creditors from repossessing assets, foreclosing on your home or taking other steps to collect outstanding balances. It also prevents creditors from contacting you about your debts unless they have permission to do so. Having a stay in place gives you leverage to either renegotiate repayment terms or possibly get a creditor to forgive some or all of an outstanding debt.
Bankruptcy exemptions
A portion of the equity accrued in a car, home or other asset may be exempt in a consumer bankruptcy proceeding. This means that you’ll have money to pay rent, buy food or take care of other needs even if an item is seized by the trustee. In a Chapter 13 case, secured assets generally remain in your possession for the duration of the repayment period as long as you stay current with the plan.
If you are struggling to stay current with your bills, it may be in your best interest to seek protection from creditors. Depending on the facts of your case, your credit score may actually go up after doing so. Furthermore, you may be able to take out new lines of credit immediately after your case is discharged.
